Media

How Rising Paywalls Are Already Paying Off for Publishers

Not long ago, Bloomberg Businessweek declared 2014 the “Year of the Paywall” for the news industry. Sure enough, everywhere you look in publishing these days, you see news organizations ranging from Politico (and its Capital New York offshoot) to the new tech-oriented website the Informationexperimenting with online-subscription models. “I would not start a media company today based on advertising alone,” Politico Chief Executive Officer Jim VandeHei told me recently. “I think it would be crazy.”

This week, the Online Publishers Association, an industry trade organization, released a study (PDF) that highlights the various ways newspapers and magazines are using paywalls to shape and expand their businesses. The group conducted interviews with executives at Condé Nast, Gannett Community Newspapers (GCI), Harvard Business Review, the New York Times (NYT), Time (TWX), and The Wall Street Journal (FOXA). The study is worth a read. Here are three, quick take-aways:

1. Online Subscriptions Don’t Cannibalize Print Subscriptions. For years, publishers worried that offering digital subscription models would inadvertently peel away diehard customers from their print products. As it turns out, pay-per-view digital products tend to attract an entirely different set of subscribers.

2. Digital Data Can Cut Down on Subscriber Churn. Publishers are using the wealth of data about their customers online to calculate their lifetime value as a subscriber, to predict outcomes of trial subscriptions, and to shape strategies to hold onto them longer.

3. Charging for Content Often Makes a Publisher’s Ad Space More Valuable. Some publishers are finding they can charge higher rates for ads appearing in subscription environments. “We have grown advertising business every single year since we’ve introduced subscription,” said Rob Grimshaw, managing director of the Financial Times’ (PSO) FT.com website. “Because of the deep relationship we have with the audience and the data we have on our subscribers, we can guarantee that advertisers reach very specific scarce audiences.”